Finding Text
Criteria: The Association’s payroll liability accounts did not agree with the actual liabilities owed at year end and required material adjustments were made as part of the audit process.
Condition: The Association’s controls were not effective to ensure transactions recorded to payroll liability accounts were appropriate and balances were accurately stated at year end on the trial balance.
This internal control deficiency is considered to be a significant deficiency.
Context: Our procedures included examining payroll tax filings, payroll registers, and general ledger detail reports and comparing supporting documentation to account balances as of December 31, 2022.
Cause: The payroll software is not configured in a way that allows for proper mapping of payroll liability accruals to correct accounts. Additionally, no reconciliation is being performed on a regular basis to ensure liabilities are properly stated.
Effect: By not reconciling payroll liabilities on a regular basis, the Association is not able to identify material misstatements in liability balances in a timely manner.
Recommendation: We recommend the Association adopt controls to reconcile payroll liability balances at least quarterly.
View of Responsible Officials: There is no disagreement with this audit finding.